Stock yield enhancement program

A word about dividends — Lenders are entitled to receive dividends and distributions on loaned securities, but will receive payments in lieu or PIL. Depending upon the holding period of the loaned shares, the receipt of PIL may have an adverse tax impact for certain US taxpayers. However, IB will attempt to mitigate payment of PILs by recalling loaned shares prior to dividend record date, but cannot guarantee that the lender will avoid receipt of PIL.

The analysis in this material is provided for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IBKR to buy, sell or hold such investments.

This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

Supporting documentation for any claims and statistical information will be provided upon request. Any stock, options or futures symbols displayed are for illustrative purposes only and are not intended to portray recommendations. Not all clients are eligible to participate in the Stock Yield Enhancement Program. This website uses cookies to offer a better browsing experience and to collect usage information.

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About Cookies Accept Cookies. Please allow hours for the un-enrollment request to be fully processed. If an account signs up and un-enrolls at a later time, when can it be re-enrolled into the program?

After un-enrollment, the account may not re-enroll for 90 calendar days. Is there any restriction on lending stocks which are trading in the secondary market following an IPO? No, as long as the account does not have any restrictions in place for eligible securities held in the account. How does IBKR determine the amount of shares which are eligible to be loaned?

The first step is to determine the value of securities, if any, which IBKR maintains a margin lien upon and can lend without client participation in the Stock Yield Enhancement Program. The debit balance is determined by first converting all non-USD denominated cash balances to USD and then backing out any short stock sale proceeds converted to USD as necessary.

In addition, cash balances maintained in the commodities segment or for spot metals and CFDs are not considered. For a more detailed explanation please see here. USD rate of 1. All securities are deemed fully-paid as cash balance as converted to USD is a credit. Will IBKR lend out all eligible shares? There is no guarantee that all eligible shares in a given account will be loaned through the Stock Yield Enhancement Program as there may not be a market at an advantageous rate for certain securities, IBKR may not have access to a market with willing borrowers or IBKR may not want to loan your shares.

Are Stock Yield Enhancement Program loans made only in increments of ? Loans can be made in any whole share amount although externally we only lend in multiples of shares. Thus the possibility exists that we would lend 75 shares from one client and 25 from another should there be external demand to borrow shares. How are loans allocated among clients when the supply of shares available to lend exceeds the borrow demand? In the event that the demand for borrowing a given security is less than the supply of shares available to lend from participants in the Stock Yield Enhancement Program, loans will be allocated on a pro rata basis.

Are shares loaned only to other IBKR clients or to other third parties? Shares may be loaned to both IBKR clients and to third parties. The program is entirely managed by IBKR who, after determining those securities, if any, which IBKR is authorized to lend by virtue of a margin loan lien, has the discretion to determine whether any of the fully-paid or excess margin securities can be loaned out and to initiate the loans.

Are there any restrictions placed upon the sale of securities which have been lent through the Stock Yield Enhancement Program? Loaned shares may be sold at any time, without restriction. In addition, the loan will be terminated on the open of the business day following the security sale date.

Can a client write covered calls against stock which has been loaned out through the Stock Yield Enhancement Program and receive the covered call margin treatment? A loan of stock has no impact upon its margin requirement on an uncovered or hedged basis since the lender retains exposure to any gains or losses associated with the loaned position.

What happens to stock which is the subject of a loan and which is subsequently delivered against a call assignment or put exercise? What happens to stock which is the subject of a loan and which is subsequently halted from trading? A halt has no direct impact upon the ability to lend the stock and as long as IBKR can continue to loan the stock, such loan will remain in place regardless of whether the stock is halted.

The collateral securing the loan never impacts margin or financing. What happens if a program participant initiates a margin loan or increases an existing loan balance? If a client maintains fully-paid securities which have been loaned through the Stock Yield Enhancement Program and subsequently initiates a margin loan, the loan will be terminated to the extent that the securities do not qualify as excess margin securities.

Similarly, if a client maintaining excess margin securities which have been loaned through the program increases the existing margin loan, the loan may again be terminated to the extent that the securities no longer qualify as excess margin securities. Under what circumstances will a given stock loan be terminated?

In the event of any of but not limited to the following, a stock loan will be automatically terminated:. Do participants in the Stock Yield Enhancement Program receive dividends on shares loaned? Stock Yield Enhancement Program shares that are lent out are generally recalled from the borrower before ex-date in order to capture the dividend and avoid payments in lieu PIL of dividends.

However, it is still possible to receive a PIL. Do participants in the Stock Yield Enhancement Program retain voting rights for shares loaned? The borrower of the securities has the right to vote or provide any consent with respect to the securities if the Record Date or deadline for voting, providing consent or taking other action falls within the loan term.